Serco earnings hit by prisoner tagging scandal
SCANDAL-STRUCK outsourcing firm Serco’s acting chief executive yesterday said he was confident of a return to growth, despite a 62 per cent decline in full-year profit and a gloomy outlook for 2014.
“The events of 2013 absorbed management’s focus and, therefore, interrupted the normal process of improving efficiency and developing our business into new areas,” said Ed Casey. “Our focus is clear, to ensure that the group has stable operations, appropriate operational controls and differentiated capabilities…I am confident that these attributes will enable Serco’s return to growth in what remain fundamentally attractive service markets around the world.”
Serco was accused of fraud relating to an electronic prisoner tagging contract last year, which led to a management overhaul and a ban on winning new government work, which was recently lifted.
Pre-tax profit fell 62 per cent to £106.6m in 2013, hit by a £90.5m one-off charge, mainly relating to the prisoner tagging contract.
The firm, which last week announced Aggreko’s Rupert Soames as its new chief executive, effective from 1 June, said revenue fell 5.6 per cent to £4.29bn in 2013.
It reiterated its forecast of a mid-single-digit revenue decline in 2014, and a 50-100 percentage points reduction in adjusted operating margin.
Shares closed up 3.87 per cent.